Soybean status elevated: House Ag Committee advances farm bill

Acting with surprising speed, the House Agriculture Committee completed work on a new farm bill designed to restore predictability to federal farm programs and increase participation in soil and conservation.

As indicated in a farm bill concept paper released on July 12, the committee elevated soybeans to the status of a program crop with its own AMTA and target price payments. But, it also made the target prices and AMTA (Agricultural Market Transition Act) payments for oilseeds and other program crops higher than anticipated.

In a statement released with a summary, the committee said the “Agricultural Act of 2001 (the title of the new legislation) provides both the flexibility and predictability that most producers, commodity and farm groups have called for in the next farm bill.”

It said the new bill, which it passed on July 27, also increased participation for soil and water conservation programs by 80 percent above current budget trends. Initially, the committee said it hoped to pass a new farm bill before the Aug. 3 recess.

“House Agriculture Committee members made good use of their farming and ranching experience to deliver flexibility and predictability for producers and budget responsibility for taxpayers,” said Rep. Larry Combest, R-Texas, the committee chairman and co-author of the farm bill concept paper.

Combest said the new bill provides a welcome departure “from the uncertainty of the recent year-to-year patchwork of additional financial assistance. The best agricultural practices begin with good field preparation, so first we listened to producers in rural hearings we began nearly two years ago, and now today our result is a productive harvest of those ideas in the 2001 farm bill.”

“The bill reported today is a good deal for agriculture and a good deal for taxpayers. Emergency spending by Congress to respond to agriculture's income crisis was proof that our programs need reworking. The committee took a bold first step toward meeting that need,” said ranking minority member Charlie Stenholm, D-Texas.

“As a long-time advocate of counter-cyclical assistance, I am pleased that this legislation addresses this need and maintains the flexibility that is so popular with the nation's producers. This legislation brings together a coalition of interests that will be needed to pass it in the full House and see it signed into law by the end of the year.”

The bill continues many of the features of the Federal Agricultural Improvement and Reform (FAIR) Act of 1996 (Freedom to Farm), including the flexibility to plant any crop other than fruits and vegetables and a handful of minor use crops on program crop base acres.

Marketing loan rates are maintained for all commodities except oilseeds, which are reduced to a level equivalent to other commodities, and grain sorghum, which is raised to a level equivalent to corn.

Farmers will continue to receive the AMTA — the fixed, decoupled payments in the FAIR Act of 1996 that were supposed to help transition farmers out of government programs — but at a higher rate than anticipated in the concept paper.

The marketing loan rates and AMTA payments will be part of the mechanism for issuing the new, counter-cyclical payments when commodity prices fall below certain levels. According to the summary, counter-cyclical payments will be triggered when a crop's price, adjusted for the fixed, decoupled payment, is below the target price. The payment rate for a crop would be calculated as the difference between its target price and the sum of the following components:

(a) The higher of either the national 12-month season average price received by producers or the national average loan.

(b) The fixed decoupled payment rate.

In the concept paper, Combest and Stenholm had indicated the target price for cotton, for example, would be set at the 1990 rate of 71.9 cents per pound. But a revision by the Congressional Budget Office put the target price at 73.6 cents. It also sets the AMTA payment at 6.67 cents a pound for the life of the new farm bill vs. 5.54 cents in the concept paper.

A similar increase was reported out for soybeans, which were to have an AMTA payment of 34 cents per bushel and a target price of $5.76, according to the concept paper. The bill puts the AMTA payment at 42 cents and the target price at $5.86 per bushel.

For the first time since the 1990 farm bill, it gives farmers the option of increasing their program base acres or retaining the base on file with their county Farm Service Agency (FSA) office.

For oilseeds and farms without current AMTA payment base and yields, the secretary of agriculture is directed to develop payment yields that are comparable to current AMTA yields in the area.

Payment limits are set at $50,000 for fixed decoupled payments, $75,000 for counter-cyclical payments and $75,000 for marketing loan gains and loan deficiency payments.

Other crops

Sugar: The bill would eliminate marketing assessment on sugar, reduce the CCC interest rate on price support loans, authorize a Payment-in-Kind program, re-establish the no-net-cost concept feature of the program and provides the secretary authority to implement allotments for sugar producers.

Dairy: Extend the milk price support program at $9.90 per cwt through 2011.

Honey: Creates a marketing assistance loan program similar to other program commodities. Provides producers price support loans or loan deficiency payments. Establishes loan rate of 60 cents per pound.

Peanuts: Makes historic reform to peanut program to make peanuts similar to other traditional program crops. Provides a fixed, decoupled payment at 1.8 cents per pound, counter-cyclical program with a target price of $480 per ton, marketing loan at $350 per ton. Terminates marketing quota program and compensates the quota-holders for the loss of the quota asset value at 10 cents per pound for five years.

Fruits and vegetables: Gives the secretary sole decision authority to combat outbreaks of plant and animal diseases with emergency funds, retain planting restriction of fruits and vegetables on base acres, provides additional $200 million in spending authority for surplus commodity purchases under Section 32, increases the Market Access Program (MAP) by $110 million per year, creates a Technical Assistance Specialty Crop (TASC) fund to assist with trade barriers and significantly increases EQIP funding with targeted spending for water conservation assistance.

Conservation programs

The conservation section devotes $16.511 billion over 10 years to soil, water and wildlife programs. This represents over a 75 percent increase in baseline spending. Program changes include:

Reauthorize the Conservation Reserve Program (CRP) through 2011 with a 40-million-acre enrollment cap. The secretary may permit harvesting of biomass for energy on CRP acreage with a reduction in rental rate.

Reauthorize the Environmental Quality Incentives Program (EQIP) through 2011 at $1.2 billion annual program level, with livestock producers receiving 50 percent of annual funding. In addition, a $675 million fund is created in EQIP to address ground water conservation issues, including cost share for more efficient irrigation systems.

Reauthorize the Wetlands Reserve Program (WRP) through 2011 and provide for an additional 150,000 acres to be enrolled per year.

Reauthorize the Wildlife Habitat Incentives Program (WHIP) to provide cost share for landowners to enhance wildlife habitat at a program level of $25 million annually.

Reauthorize the Farmland Protection Program (FPP) at a program level of $50 million annually.

Authorizes 2 million acres in a Grassland Reserve Program to be enrolled in 10-, 15- and 20-year contracts. A total of 1 million acres would be planted to native grass and 1 million acres devoted to restored grasslands.

Provide up to $100 million per year to provide conservation technical assistance to producers using any governmental or private contractors.

$150 million to fund the Small Watershed Dam Restoration.

Combine the Forestry Incentive Program (FIP) and the Stewardship Incentive Program (SIP) and fund at $15 million per year.

Trade issues

On trad issues the bill would

Reauthorize the Market Access Program (MAP) through 2011. Increase funding by $110 million per year (from $90 million to $200 million).